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Investment Opportunities

4K TV: Better-Looking Than Real Life?

As leaps and bounds of consumer technology usher us into the 21st century – from packages delivered by drones to custom-printed M&Ms – one thing certainly hasn’t changed: It’s still impossible to keep up with the Joneses (or should we call them the Jetsons now?).

As anyone who’s ever bought a computer knows, obsolescence is assured – no sooner have they walked out the door that the next generation of processors is on the shelves.

It turns out high-definition television’s days were numbered, as well. As early as 2012, television manufacturers have been itching to introduce 4K televisions, which push a picture that’s four times as detailed as their HD predecessors.

The difference lies in the number of pixels on either screen – 4K televisions can pack up to eight megapixels, while a 1080p HD television has only about two megapixels. (FYI, the human eye has a resolution of roughly 576 megapixels, though the first seven are the only ones that really matter, Gizmodo.com reports.)

And consumers are beginning to notice – in 2013, 1.9 million people bought a 4K television. This year, 4K television sales numbers are expected to jump to 12.7 million thanks to dwindling purchase costs (down from $4,900 to $2,000) and rising content quality, according to third-party industry research firm NPD DisplaySearch.

What’s more, the vast majority of buyers – 78% – are in China, meaning the U.S. remains a nearly untapped market; a fact that panel makers are hedging their bets on (manufacturers plan on producing 27 million this year alone), per TomsGuide.com.

The only question is – what producer will lead the pack? Before you transact, take a look at our picks for most innovative 4K producers that have the potential to turn the Joneses green with envy.

Who’s Out in Front

In the short term, the vast majority of sales are expected to come from Chinese consumers, whose rapidly growing middle class contingent is choosing to pick up a 4K for its first television set. Also, the average 4K set remains hundreds of dollars cheaper in China, the backyard of leading set producers Hisense (Shanghai: 600060) and TCL (Shenzen: 000100), according to an article in Fortune.

“On the global scale, China is incredibly important for the sale of 4K TVs,” said Jonathan Frank, vice president of marketing at Hisense USA. “We are seeing the largest adoption and growth in China, and there is much more readily available 4K content, which in turn drives sales.”

In fact, TCL’s chairman and co-founder, Tomson Li, is so confident in his company’s products, he plans on taking them to the silver screen through product placement in the next installment of the movie series Ironman.

Who’s Catching Up

But following on the slew of success in China, Taiwanese companies that are mostly unknown to the American marketplace – including Innolux Corp (Taiwan: 3481) and AU Optronics Corp. (NYSE: AUO), which are predicted to dominate 58% of 4K sales in 2014, according to the “Quarterly LCD TV Value Chain & Insight Report” by NPD DisplaySearch.

If you’re looking for a more familiar brand to invest in, consider investing in South Korean manufacturers , which could capture 25% of the market in 2014.

What You Should Do

The rise of 4K poses an intriguing opportunity for familiarization with China’s oft-obscured but increasingly innovative consumer electronics companies, like ChinaStar and BOE, as both are expected to corner 14% of the market in 2014.

Watch for these upstarts to become publicly traded, and keep an eye on which one becomes a market leader.

But be warned – unlike our investment advice, the 4K version of Titanic might get a bit emotional.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official position of Wall Street analysts.


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